Dismissing staff is never easy. Especially in the times of economic uncertainty and the business making losses. Reduction of the size of operations / activity / loss of a significant client mean that the employer may reduce its workforce by reason of redundancy, pursuant to Article (110) of the Bahrain Labour Law. However, as per the Bahrain Labour Law a contract of employment may only be terminated thirty (30) days after the Ministry of Labour is notified of the reason for termination.
In case of termination of the employment contract ‘by reason of reduction of its size of activity’, the employee shall be entitled to compensation equivalent to half of the compensation, as specified in Article (111) of the Bahrain Labour Law. If the employee’s contract is for an unspecified term, Article (111)(b) of the Bahrain Labour Law will apply, whereby compensation shall be calculated based on two days’ wages for each month of service, on the condition that this shall not be less than one (1) month and not more than twelve (12) months’ wages.
In addition to the compensation for redundancy, the employee shall be entitled to receive a gross salary, inclusive of all contractual benefits up and including the date of termination, one (1) month’s notice or payment in lieu, payment in lieu of any accrued but untaken annual leave entitlement, a certificate of service (upon request), bonuses, if any (pro-rated, if appropriate), expenses, if any.
Non - Bahraini (expatriate) employees are also entitled to receive a leaving indemnity. In accordance with Article (116) of the Bahrain Labour Law leaving indemnity is calculated on the basis of fifteen (15) days’ salary for each year of the first three (3) years’ of service and one (1) month’s wages for each year of service thereafter.
Upon termination of the employment relationship, the last employer to whom the work permit was issued is obliged to incur the transport expenses of a non-Bahraini (expatriate) employee to the place, specified in their contract of employment, or if the contract does not specify such a location, to the place to which the employee belongs by nationality.
The employer also has an obligation to notify the LMRA about the termination of the expatriate employees’ contracts of employment within five (5) days of the termination date. The expatriate employees must leave the Kingdom of Bahrain within thirty (30) days from the termination date.
For more information on what steps to follow we recommend you our Redundancy Policy.
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All our policies have been officially approved by the Ministry of Labour in the Kingdom of Bahrain and are legally complaint.